It is not an ideological outburst expressing that the process of wealth concentration that characterizes the present historical time has been based on an endless series of robberies and schemes whose victims have been large population majorities and the benefited, small minorities appropriators of assets and rents.‘They have stolen even spring from us but they cannot take over our song, It seems fragile but it will not give up’ [[[Verses and interpretation by Teresa Parodi->http://www.youtube.com/watch?v=DNhYhQzBsdo&feature=related].]]
We economists are used to employing technical terms when describing or analyzing what is going on; this author is no exception. Therefore robberies and schemes are denominated ‘extraction of value mechanisms’, a euphemism that, as such, is a ‘soft or politically correct manifestation of ideas whose blunt and straightforward expression would be severe or rude’.
In other texts [[[Article Differentiating generation, redistribution and extraction of value->http://opinionsur.org.ar/Diferenciar-geracao-redistribuicao?lang=pt], Opinión Sur. March 2012.]] we have analyzed some of the extraction of value mechanisms that have gravely affected social, economic and environmental order. In every case, certain actors employ strength or shrewdness to extract for their own benefit value they do not generate by themselves, sterilizing with their activities a fair share of a country or locality’s development potential. In these lines we complement that conceptual analysis with real facts that have been recently exposed. Because of their meaning, they prove that we are not in the presence of isolated episodes but of ‘normal’ results, in the sense of expected, derived almost inexorably from a course and a systemic way of functioning sustained by values of greed, selfishness, violence, not considering others, irresponsibility regarding the planet and the people inhabiting it.
Those facts are centered in criminal behaviors of large financial groups because it has been precisely financial capital a main responsible for the process of extraction of value that accelerated economic concentration, deepened inequality and poverty to unsustainable levels and dragged the world’s economy into the great contemporary global crisis. It is clear that these financial groups have not acted alone but in complicity with other actors in the media, the educational system and certain think tanks that have made us believe there is no other way of functioning, of thinking, of being and feeling. Of course it is not like that. There are other better options that once implemented can, as usual, be developed and improved while going through new courses and trajectories.
Recent financial crimes
Thanks to the enormous power acquired, large financial groups managed to eliminate important regulations that limited their activities to some extent. The aggressive deregulation gave way to a financial licentiousness that produced two of the most dramatic events in contemporary history. On one hand, it deviated an immense mass of real economy resources towards financial speculation creating the conditions for the appearance of a tidal wave of robberies and schemes that sterilized a great part of the development potential of affluent countries and whose impacts spread towards the rest of the world. But adding insult to the crimes committed, once the crisis burst those in control of the global economy steering wheel, and of every country in particular, followed what was demanded by its mandators (the same financial capital that triggered the crisis): burdening majority sectors with the cost of those monumental bailouts, they subtracted public resources to a scale never before seen in order to save those responsible for the chaos.
In a lucid and well documented article [[Article Escándalos(Scandals), Alfredor Zaiat, Página 12, August 18th 2012]] , Alfredo Zaiat journalist specialized in economy points out that ‘a way to evade political responsibility and to avoid questioning the very foundations of the system is blaming unfaithful employees or unscrupulous bankers for the crisis. The crisis has not burst because of the schemes of some account executive, or because of moral deviations of a banker, but because it has systemic roots. These are found in the current way of functioning of a global capitalism subjugated to the demands of finance. Its ultimate expression has been the Libor rate manipulation where most of the main banks in Europe and America were involved’.
And he enumerates an impressive list of criminal financial operations [[Idem]]:
‘-Jerome Kerviel, the broker from the French bank Société Générale, was cited at the beginning of 2008 as accountable for causing loses of 7 billion dollars.
-Bernard Madoff, in december 2008, was placed under arrest for conning hundreds of investors for 50 billion dollars, the largest fraud conducted by a single person. He was sentenced to 150 years in prison.
-David Redmond, of Morgan Stanley, in May 2009, created a large unauthorized position on oil futures, causing a collapse in that market.
– Alexis Stenfors, from Merrill Lynch London, to mask loses overvalued for five years the bank’s commercial allocations, which meant after being caught, in February 2009, the depreciation of assets for 456 million dollars of the entity.
-The Irish Justice accused Sean Fitz Patrick, the most emblematic character of the Irish banking scandal, the Anglo Irish Bank, for committing fraud crimes and irregularities when he was leading the entity, which collapsed in 2008 and was nationalized the following year.
– Kweku Adoboli is the protagonist of a scandal for 2 billion dollars lost in the European Capital Management Division of the Swiss bank USB in London, in a specific investment fund (Exchange Traded Fund). He was accused in September 2011 before a London Court of fraude and accounting irregularities.
This was the last reported case of a financial scandal that held a single bank employee responsible, as if it were an isolated operation of immaculate entities in the eyes of the law, when facts have proven the opposite. It is verified as such in the following cases:
-JP Morgan announced the loss of 2 billion dollars, and claimed it was due to wrongful speculation of credit derivatives. The amount could reach 20 billion dollars.
– Citibank agreed to pay a fine of 285 million dollars for fraud accusations, for deceiving investors into placing funds in toxic mortgage credits when the housing market was beginning to crumble.
-Goldman Sachs &Co. also paid 550 million dollars for similar accusations in 2010.
-JP Morgan Chase & Co. resolved a similar issue in June 2011, paying a fine of 153.6 million dollars.
-The British bank Standard Chartered will be under surveilliance for two years on behalf of the State of New York, after having agreed to pay a fine of 340 million dollars, accused of conducting operations with Iran, despite the blockade imposed by the American authorities.
-The British bank HSBC was accused by a US Senate Commission for money laundering of Mexican drug cartels and illegal funds coming from Saudi Arabia and Iran for a total of 28 billion dollars.
-The implicated banks in the Libor manipulation scandal between 2005 and 2009 could receive a global fine of 12 billion euros. In principle, the United States and United Kingdom’s financial regulator fined Barclays for over 450 million dollars. The Royal Bank of Scotland and the Lloyds had also been accused of distorting information to alter interest rates. At least eleven of the largest European and American entities are involved in the manipulation of the Libor rate. The volume of banking transactions at a global scale based in the Libor rate is estimated in 360 trillion dollars (about 40 times the Gross Domestic Product of the United States)’.
Facing this unquestionable avalanche of information, it is clear that the series of financial crimes are not isolated facts but an expected consequence of the way of functioning that has been imposed upon us. Economic concentration has not been, is not, harmless: it punishes millions of innocent people turned into victims and at the same time generates structural inconsistencies that cause permanent systemic instability and recurrent crises.
In front of the series of robberies and cons, there is no room for an astonished glance. To transform the situation we need to rise over our own shortsightedness and disunity. It is possible to do so. This is one of the main challenges we are confronting at a historic moment that finds us as protagonists.
Popular verses say that ‘in the auction they took everything from us, disposing our heart, they shared out even the impossible, (….and, however, …) we can still endure what is going on’ . And that is exactly what we are saying: we can still cope with and transform what is going on.